Twitter announces its $1 billion initial public offering

The company will trade under the ticker name TWTR.

Twitter filed an S-1 form with the Security and Exchange Commission on Thursday, officially providing more details about its intent to take itself public, offering up 472,613,753 shares of stock in order to raise $1 billion.

The initial public offering marks the first time that Twitter has been required to make much of its financial data public, and it shows a company that is growing its revenue but still hasn't quite turned a profit.

The SEC filing says that Twitter has 218 million monthly active users, up from 200 million in December 2012. The company also says it has seen a 198 percent growth in year-over-year revenue, bringing in $316.9 million in 2012, and a 38 percent decrease in net loss to $79.4 million. For the first half of 2013, the company brought in $253.6 million in revenue and its net loss was tallied at $69.3 million.

AllThingsD reminds us that expectations for Twitter's revenues “were pegged at just about $600 million this year and close to $300 million last year.”

So Twitter's IPO will be small, at least compared to Facebook's recent IPO, in which the company said it expected to raise $13 billion on 337,415,352 shares of stock. But Facebook's shares stumbled quite a bit when the company finally got out on the track, with some investors claiming that the company had been overvalued. It has only relatively recently found its footing.

In the company's "Risk Factors" section, Twitter says that going forward, its profitability is dependent on growing its user base.

"To the extent our user growth rate slows, our success will become increasingly dependent on our ability to increase levels of user engagement and ad engagement on Twitter. We generate a substantial majority of our revenue based upon engagement by our users with the ads that we display," the company wrote in its S-1.

Guess there’s going to be a few more millionaires running around the neighborhood, can’t wait till the local papers pick up on this so they can start complaining about the rent, but on the flip side, maybe all of those condos going up on Market Street will get sold after all.

I'm not sure about this. Twitter's ability to monetize tweets has always been up in the air, and I haven't seen any indication they have come up with a strategy that will work. So far they seem to be cracking down on third party clients in an attempt to prepare for ads, but I don't know how well that will work. Aside from already having everyone signed up and connected, there's nothing twitter does that can't be done by a competitor easily if Twitter generates a lot of discontent by being too blunt in their attempts to monetize.

I'm kind of thinking they don't have any good ideas either and they are just going public to cash out before investors realize monetizing 140 characters without making people hate you is really hard.

I'm not sure about this. Twitter's ability to monetize tweets has always been up in the air, and I haven't seen any indication they have come up with a strategy that will work. So far they seem to be cracking down on third party clients in an attempt to prepare for ads, but I don't know how well that will work. Aside from already having everyone signed up and connected, there's nothing twitter does that can't be done by a competitor easily if Twitter generates a lot of discontent by being too blunt in their attempts to monetize.

I'm kind of thinking they don't have any good ideas either and they are just going public to cash out before investors realize monetizing 140 characters without making people hate you is really hard.

By cashing in on people that treat it like a news reader. They have a lot more to work with than you think, so if they can’t cash in on all the news sites pushing out their updates there or people using it to coordinate meetings/demonstrations/events or all the people talking about whatever is on television this year (say, simulcasting that very show on their site and getting a cut of the sponsorship revenue), or just generally all the information people post there not just willingly but publicly, then yeah, their business will go down in flames.

It’s not just people talking, they’re always talking about something, and when it’s something big enough to spread across all of Twitter itself, that’s a potentially lucrative opportunity for them. A cash injection at this stage will go a long way towards making whatever they have planned, possible. It’ll be interesting to see exactly what they have in mind.

I think Twitter's userbase will still expand significantly. I believe that I'm tech-savvy, but I have only recently starting using (and enjoying) Twitter. But I'm not sure how much just eyes-on-ads profits Twitter, as opposed to click-throughs or eventual purchases.

Wow, US$1B for Twitter. Where's the value? Where's the business model? Insane, I hope my 401K investors don't touch this with a ten foot pole. If you want to give your money away, give it to a charity.

Wow, US$1B for Twitter. Where's the value? Where's the business model? Insane, I hope my 401K investors don't touch this with a ten foot pole. If you want to give your money away, give it to a charity.

"We don't make a profit, but we're totally worth a cool billion. Trust me", said Twitter one day.

Well, almost. They are trying to raise a billion... for what I have no idea. I can't fathom why these companies go public, and how they find suckers help get them there. Being public these days is a sure fire way to stifle any creativity or growth in a company, as you're now beholden to the knee jerk masses. Dell, Chrysler and many others have realized this and are or have gone private.

I'd like to see the story their presenting to the street... maybe buying instagram is in there somewhere.

Every day I get 20+ DM spams from users, saying crap like, "Quickly burn off 2+ inches of stomach fat while losing up to 30 lbs of fat in less than 1month." I would not invest in any platform that can't get 1-2 engineers to, I dunno, mass block every URL that resolves to sites that are sending these spams. I know you can't remove the spam problem, but they don't even pretend to care.

In 2012 they had revenue of $317 million, and a loss of $80 million. So they spent nearly $400 million (and are on track for substantially more this year). What do they spend that on?

That's not too big a loss in my eyes if they find a creative way to monetize. Like others have said, they can capitalize on being people's news aggregator. One dude told me that he use twitter to keep track of Syria from actual Syrians.

I've only seen one company do ads really well and that was Tumblr. They put the content of the ad first. Making sure it was creative enough to even be featured by them. And they do it in a completely unobtrusive way. I don't really know how well it works profit-wise but they gained respect from me on that front.

"We don't make a profit, but we're totally worth a cool billion. Trust me", said Twitter one day.

Actually they expect to be worth much more. I think the expected market cap for TWTR is somewhere around $10 billion, but I'm not sure what's the latest number.

The $1 billion figure is the amount of money that they're raising. In other words, that's the amount of new stock that's being sold. That billion will go into Twitter's capital. Assuming a market cap of $10B, the new stock will then be about 10% of the company. The rest will be owned by Twitter's current stockholders.

The IPO will create at least one Twitter billionaire -- AFAIK, Evan Williams owns more than 10% of the company.

In 2012 they had revenue of $317 million, and a loss of $80 million. So they spent nearly $400 million (and are on track for substantially more this year). What do they spend that on?

That's not too big a loss in my eyes if they find a creative way to monetize. Like others have said, they can capitalize on being people's news aggregator.

With 218M active users all they need to do is monetize the average user for $0.37 per year to break into the black. That's not many ads spread over a whole year.

Another possibility: If they can get 5% of their user base to pay an average $11 per year for some premium features that would also work to get them into the black. If Twitter could find a way to launch a next generation combined Google Reader/Google News service I might very well consider paying.

I've always found twitters ads more relevant than Facebook's. I couldn't tell you how many ads I've intentionally clicked on twitter, but its more than on Facebook (0).

I wish them luck.

I find this strange. Maybe I have a problem, but I don't think I've ever intentionally clicked an ad. Ever. In fact, I don't notice most ads when surfing - my brain must be filtering them automatically. I also turn down all commercial calls I get. When I'm in the market to buy something, I prefer to do the research myself. Oh, and I don't have a twitter account. Never seen the relevance of it. (this is, of course, a personal opinion)

I have nothing against Twitter specifically, but wouldn't it be a glorious thing if, on the day it starts trading, every single Twitter user jumped ship to the next thing, leaving the "investors" with a billion dollars worth of nothing. A victory for authenticity perhaps? A message, from the 99% to the 1%, that you can't create wealth without being productive?

"We don't make a profit, but we're totally worth a cool billion. Trust me", said Twitter one day.

Well, almost. They are trying to raise a billion... for what I have no idea. I can't fathom why these companies go public, and how they find suckers help get them there. ..snip..

It's the second coming of the Dot Com Bubble (and no, I don't mean Kim Dotcom's prodigious girth). The clowns that control the capital on Wall Street care about one thing: making money. They're not tech gurus and frequently misunderstand how things work. The Facebook IPO and subsequent lackluster performance are great examples.

Even though there are some analysts are aware of this, a majority of financial types simply do not understand that monetizing and becoming profitable using ads on social networking sites is not as easy as they thought. Throw in that a growing majority of social network users access from mobile devices, an advertising platform that is significantly difficult to monetize, and this problem compounds.

Social networks have exploded in popularity because people like to use them and connect with them. That doesn't mean they are intrinsically profitable. The investment types don't see that though. I personally feel like many of them are hoping for growth and profits like those seen in the first bubble and are hoping to cash in. They're rushing in with cash, but without understanding the technology behind the investment and without having a plan to sustain revenue, aside from growing the user base. Someone phone Zynga and see how that ever-expanding user base is working out for them.

I think Twitter's userbase will still expand significantly. I believe that I'm tech-savvy, but I have only recently starting using (and enjoying) Twitter. But I'm not sure how much just eyes-on-ads profits Twitter, as opposed to click-throughs or eventual purchases.

I can't see it possibly expanding any more. It's been widely visible for several years now. Any come-lately's will be balanced out by those abandoning the platform.

More aggressive attempts at monetization are going to drive users to something else. And there's always something else.

Twitter's intrinsic value is way higher than $1 billion. (Having access to the instantaneous zeitgeist is worth serious bank to every major corporation that exists.)

For whatever reason, though, they've decided not to monetize the raw stream of tweets. I bet if they built a robust set of analytics, and sold access to that--think Google Analytics for tweets--companies would pay through the nose to get access to it.

I think Twitter's userbase will still expand significantly. I believe that I'm tech-savvy, but I have only recently starting using (and enjoying) Twitter. But I'm not sure how much just eyes-on-ads profits Twitter, as opposed to click-throughs or eventual purchases.

I can't see it possibly expanding any more. It's been widely visible for several years now. Any come-lately's will be balanced out by those abandoning the platform.

More aggressive attempts at monetization are going to drive users to something else. And there's always something else.

Facebook has over a billion users. Twitter has about one-fifth that, and can easily be accessed by people with just a featurephone, which is hugely important in the markets that have skipped, or are in the process of skipping the PC era, and going straight to mobile. (Africa, India, huge swaths of China.)

IOW, Twitter's potential userbase is bigger than Facebook's. That said, I suspect it's unlikely they'll surpass Facebook. The very things that make it more widely available, i.e. it's stripped down nature, also work against it in that it doesn't "do everything" the way Fb does.

Facebook has over a billion users. Twitter has about one-fifth that, and can easily be accessed by people with just a featurephone, which is hugely important in the markets that have skipped, or are in the process of skipping the PC era, and going straight to mobile. (Africa, India, huge swaths of China.)

IOW, Twitter's potential userbase is bigger than Facebook's. That said, I suspect it's unlikely they'll surpass Facebook. The very things that make it more widely available, i.e. it's stripped down nature, also work against it in that it doesn't "do everything" the way Fb does.

That's the thing - I think everyone who it appeals to already knows about it and has decided whether or not to use it. It's certainly as or more visible to the public as Facebook is. You see @username everywhere now.

Comparing it to another system and showing that it has a fraction of the users isn't a good thing. Both services have been available for roughly the same amount of years.

US main legal team: Maybe 4-5 persons, pay almost equal to average upper management. 0.5M

Twitter has lots of people working around the globe, and as you see there are lots of software development jobs, lots of media-related jobs, and lots of sales-related jobs in addition to data analysts and accounting and HR and all that. Let's assume 1500 can fit under this umbrella at about $55k per year? 82.5M.

Twitter is also available in a few dozen languages, on multiple platforms. That's at least 50 employees at $50k = 2.5M

Each sales office costs rent and other stuff. The main office located in San Francisco, and thee larger offices in San Antonio, Boston, and New York. Let's assume some total $10M total in rent, office equipment 'n stuff?

Right now we are at 1.5+0.5+82.5+2.5+10 = 97.

Then there's tax. Let's say a low flat 25% and we are at about 125M. Before the big costs: Data centres and bandwidth. Building and running your own data centres ain't cheap. That's where I imagine most of the money drains.